Corn
Price action: December corn rallied 6 1/2 cents to $4.01 1/2, ending the session above the 10-day moving average.
Fundamental analysis: Rather surprisingly, corn futures were able to pull off a rally from a fresh near-term low forged early on, despite USDA printing a record yield and third highest production figure in late-morning trade. The bearishness of USDA’s production estimate was obviously eclipsed by lower-than-expected ending stocks for both old- and new-crop, at 1.867 million bu. and 2.073 million bu., respectively, with the biggest change to the balance sheet resulting from a 25-million-bu. increase in estimated corn exports. However, a 15-million-bu. decrease in estimated food, seed & industrial (FSI) use negated a portion of the bump in exports. Meanwhile, the forecast for new crop exports also rose 75 million-bu. to 2.3 billion bu., though FSI use was trimmed 15 million bu. to 6.84 billion bu.
USDA also reported a daily flash of 165,000 MT for delivery to unknown destinations during 2024-25 and reported weekly export inspections of 974,677 MT (38.4 million bu.) for the week ended Aug. 8, which were down 297,450 MT from the previous week but within the expected pre-report range of 800,000 MT to 1.3 MMT.
Meanwhile, weather continues to prove favorable for grain fill across most of the Corn Belt, with western areas to receive some rainfall this week, while eastern areas of the region as well as portions of Kentucky, the lower Delta and interior southern states should be mostly dry though Friday. Rains are expected across the eastern Corn Belt during the upcoming weekend and early next week, according to World Weather Inc.
USDA will release their weekly Crop Progress Report this afternoon. Analysts expect USDA to leave corn conditions unchanged at 67% “good” to “excellent,” according to a Bloomberg poll.
Technical analysis: December corn rallied from an earlier contract low, ending the session above the 10-day moving average of $4.01 1/4, which has served as initial resistance since the end of July. An extension of today’s gains could indicate a near-term bottom is in place, though the 20-day moving average of $4.06 3/4, which has also served as a key resistance level, will now serve as initial resistance and is backed by the 40-day moving average of $4.19 1/4. Conversely, initial support will now lie at the psychological $4.00 level, followed by $3.92 1/2, today’s low of $3.90 1/4 and then $3.87 1/4.
What to do: Get current with advised sales.
Hedgers: You should be 80% priced in the cash market on 2023-crop.
Cash-only marketers: You should be 80% priced on 2023-crop.
Soybeans
Price action: November soybeans sunk 16 1/2 cents to $9.86, though strength in corn helped close prices off intraday lows. September meal futures plunged $5.70 to $3060. September bean oil dropped 94 points to 41.48 cents.
Fundamental analysis: Soybeans faced accelerated selling pressure following higher-than-expected production in today’s USDA reports. Many analysts had penciled in a record yield for today’s Crop Production Report from USDA and were vindicated when USDA released an estimated 53.2 bushels per acre yield for this fall’s crop, though most did not see acres topping the June Acreage Report, especially considering how many acres were left to be planted when USDA surveyed for the June report. USDA raised planted acres an additional million acres to 87.1 million acres, bringing production to 4.589 billion bushels, a record. That more than offset minor adjustments to use, as the agency raised expected exports by 25 million bushels to 1.85 billion bushels. They raised residual use modestly, bringing total use up to 4.389 billion bushels, leading to ending stocks of 560 million bushels, which would be the most since 2018-19 and well above the prior estimate of 435 million bushels. USDA opted to leave the old-crop balance sheet unchanged, projecting ending stocks at 345 million bushels.
USDA reported soybean export inspections of 326,546 MT (12.0 million bu.) for the week ended Aug. 8, up 59,663 MT from the previous week and within the pre-report range of expectations from 250,000 to 400,000 MT. Inspections continue to be strong but are struggling to meet the required rate to achieve the current USDA estimate for old crop. Inspections tend to be widely variable in the last few weeks of the crop year.
USDA reported daily soybean sales of 300,000 MT to unknown destinations. Of the total, 100,000 MT is for 2023-24 and 200,000 MT for 2024-25.
Technical analysis: November soybean futures continue to undergo heavy selling pressure as bears retain the technical advantage. Prices broke downtrend support following today’s reports, further cementing bears’ edge. Bulls managed to close prices above $9.80 support, which has been a key level for soybeans on the long-term chart. Further selling finds support at $9.75. Bulls are seeking to overcome resistance at $9.94 1/2, then the psychological $10.00 mark. Prices are well below the 10-day moving average at $10.16 1/2, which could spark some short covering.
September meal futures continue to undergo heavy selling pressure, marking a fresh contract low today. Prices have seen sharp selling for five consecutive sessions now and prices are nearing oversold on the daily bar chart. Support stems from today’s contract low at $303.20, which is reinforced by the psychological $300.00 mark. Initial resistance stands at $311.70, which is backed by $314.10 then th 10-day moving average at $321.50.
September bean oil continues to trend lower. Prices stopped just shy of downtrend line resistance on Friday at 42.40 cents, which remains key resistance. Additional resistance lies at 43.57 cents. Bulls are seeking to hold support at today’s low of 41.23 cents, which is reinforced by 40.85 cents, then the contract low at 39.67 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2023-crop with 25% reowned in October $10.50 short-dated serial call options at 18 1/2 cents. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 80% priced on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December SRW wheat fell 6 cents to $5.59 3/4 and near mid-range. December HRW wheat fell 7 cents to $5.63 1/2 and near mid-range. September spring wheat futures firmed 2 1/2 cents to $5.91 1/4.
Fundamental analysis: Today’s monthly USDA supply and demand report did not move the wheat futures markets much. The agency lowered its all-wheat production forecast by 26 million bu. from last month. U.S. wheat carryover for the 2024-25 marketing year was reduced 28 million bu. from last month and 34 million bu. below the average pre-report trade estimate. USDA cut total supplies for 2024-25 by 26 million bu. from last month due to the smaller wheat crop estimate. USDA put the national average on-farm cash wheat price for 2024-25 at $5.70, unchanged from last month.
USDA today also reported weekly U.S. wheat export inspections of 649,199 MT, up 178,717 MT from the previous week and above analysts’ expectations.
World Weather Inc. today said recent rain and milder weather in the northern U.S. Plains was welcome and good for most of the production region. Winter crop harvesting will advance well in the Pacific Northwest and around showers in Ontario and Quebec as well as parts of the U.S. Midwest. Spring cereals in eastern Canada’s Prairies will get some needed rain during mid-week this week. Weather conditions in other major wheat regions around the world see Australia’s crops looking good for the start of spring development. Argentina crops are semi-dormant with rain needed in Argentina before spring arrives. Wheat in northeastern China would benefit from drier weather. Eastern Russia’s New Lands will remain wet and mild to cool, maintaining some concern over wet weather disease. Crops in the southwest of Russia need some rain. Europe spring cereals are likely developing relatively well, said the forecaster.
This afternoon’s weekly USDA crop progress reports are expected to show U.S. winter wheat harvested at 93% complete as of Sunday, versus 88% last week and 92% done last year at this time. U.S. spring wheat harvested is seen at 16% complete versus 6% last week and 24% done last year at this time. The spring wheat condition is expected by the trade to be in 74% “good” to “excellent” conditions as of Sunday, the same as last week and compares to 42% in the same category one year ago at this time.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. However, price downtrends on the daily bar charts have stalled out. SRW bulls’ next upside price objective is closing December prices above solid chart resistance at $6.00. The bears’ next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at last week’s high of $5.74 3/4 and then at $5.81. First support is seen at today’s low of $5.52 and then at the contract low of $5.39 1/2.
The HRW bulls’ next upside price objective is closing December prices above solid technical resistance at $6.00. The bears’ next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at last week’s high of $5.83 3/4 and then at $5.95 1/2. First support is seen at the contract low of $5.51 1/4 and then at $5.40.
What to do: You should have claimed profits on the 2024-crop hedges in July SRW futures. Wait on a corrective rebound to increase sales.
Hedgers: You should be 60% sold on 2024-crop in the cash market. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cash-only marketers: You should be 60% sold on 2024-crop. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cotton
Price action: December cotton rose 73 points to 69.07 cents, a low-range close after notching a near two-week intraday high early on.
Fundamental analysis: Cotton futures rallied to the highest intraday level since July 23, with a volley of friendly data from USDA allowing the natural fiber to extend gains. Meanwhile, continued strength in crude oil futures also proved positive for prices along with a fading U.S. dollar.
USDA forecast cotton production at 15.108 million bales, well below trade expectations of 17.02 million bales and 17.00 million bales in July. However, 2023-24 ending stocks were pegged at 3.15 million bales, up from 3.05 million bales in July, with no changes made to the supply side of the balance sheet. On the demand side, exports increased 150,000 bales to 11.75 million bales, though unaccounted use was trimmed 250,000 bales to an estimated -430,000 bales. Moreover, new crop ending stocks were forecast at 4.5 million bales, down from 5.3 million bales in July due to a 1.79 million-bale-drop in supplies due to a smaller crop estimate. Total use slid 1 million bales, with the entire cut in estimated exports, now estimated at 12 million bales. Unaccounted use was adjusted up 10,000 bales to an estimated -140,000.
World Weather Inc. reports West Texas cotton areas will not get much moisture in the coming week to ten days, although it will not be completely dry. Cotton in southeastern states experienced some serious flooding last week from remnants of Hurricane Debby, but the crop has potential to recover well if dry weather can prevail for a while. Drying may occur for a while this week, but more rain next week could maintain some concern over the crop.
Technical analysis: December cotton ended the session low-range after testing the 20-day moving average of 69.16 cents and forging an intraday high at the 40-day moving average of 70.80 cents, a crucial area for bulls to achieve in order to advance recent gains. Conversely, the 10-day moving average of 68.22 cents will continue to serve as initial support, and is backed by support at 67.41 cents, last week’s low of 66.55 cents and 65.79 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.